Watchdog module (the one taking care of subscriptions) is designed to help users track changes in the system. When a record (in most RecordBrowser sets or Calendar Event) is created, every user can pick to "subscribe" this record. He will then, be informed, via aforementioned applet, if any changes are made in this record (i.e. record was edited or a note was added/edited/deleted). That's the basic mechanic for Watchdog.
Watchdog also allows users to subscribe whole categories - means each time a new record is created in selected category - he will be informed about this. Also - privacy still applies - if user is not destined to even see a record - he will be in no circumstances informed about it's existence.
However, in current epesi version, Watchdog does a little bit more. Each time a Task is created - all users that were assigned to it are automatically marked as subscribers. The same is true for PhoneCalls, Tickets and Events. Moreover - if you are subscribing a certain Contact - you will be informed about all events (Tasks, PhoneCalls, Tickets) regarding this person. Similar thing is true for Projects and Tickets - if you subscribe a certain project, you will be informed about all new Tickets that are created in regards to that project.
Also, RecordBrowser has an option to automatically subscribe all records we create - separate setting for each category. This options can be found in My Settings->Control Panel->Browsing Records.
Kind regards,
Arek